There are two problems I find worrying with our real estate industry and those pursuing a real estate career.
- It is far too easy to get a real estate license, the classes in no way prepare you to actually work as a REALTOR, and the general public believes the job to be an easy way to make money.
- This is compounded by, in my opinion, too many offices that sugar coat the image to reinforce this belief so that you sign up and start paying their fees.
These are the 22 truths you need to understand when thinking about becoming a REALTOR and interviewing brokerages. Original article can be found here: https://www.inman.com/2021/01/25/14-truths-your-recruiting-broker-probably-didnt-tell-you/
1. Being a real estate agent is NOT about selling houses
Although being an agent is a sales-oriented profession — you are, after all, helping clients buy and sell homes — it’s more about building a business.
The difference between selling homes and building a business is radical: If you focus solely on sales, your income will fluctuate wildly based on market conditions, the number of hours you invest, the whims of your clients and so on. The bottom line: The moment you stop selling, your income abruptly comes to a halt. If you build a business, however, you can also build a life.
Ironically, I had been a Realtor for 12 years before someone explained this to me.
2. This is NOT like HGTV
What happens on HGTV stays on HGTV — it will not be coming to any locale close to you any time soon. Having an addiction to home-oriented shows is not a criteria for becoming an agent — it simply means you have too much time on your hands. I have heard so many agent candidates say, “I just love looking at houses.”
The truth is: This job is about looking at your client while they look at houses to gauge their responses. What you think about any given property does not matter one iota.
In fact, after you have shown a fussy pair of buyers their 12th home in one day, you may get nauseated over the thought of going through one more front door.
3. There is a significant lag between starting and actually getting a paycheck
Some statistics estimate it may be six months after starting before you get your first paycheck, and depending on your proficiency, it could be even longer. Keep in mind that you can only start real estate activities after you have your license, so you should factor in the time it takes to obtain your license.
In fact, you might be in that group of “lucky” individuals who do not manage to sell anything at all. You need to make sure you have a significant financial cushion or the support of someone who loves you enough to support you for as long as it takes for you to “launch.”
4. Brokers want their money upfront
Although you might not be making any money, you can count on the fact that your broker is. Brokers stay in business by charging desk fees, training fees and more. Additionally, you will need to front funds for licensing, MLS dues and any related association fees. Want additional training? That will usually be on you as well.
5. Once we have you signed, you are basically on your own
My first broker was fond of retelling his inaugural experience as a new agent: He showed up in the office in his suit, was shown to a desk, handed a copy of a phone book and instructed, “Start calling.”
In-house training has improved. Although many recruiters tout their training programs, the truth is that it is focused on the contract for many companies because brokers do not want to end up in court.
When I joined a well-known sizeable area brokerage (20 years ago), I sat through a week of classes with a hundred or so other new recruits. Once we “graduated,” we were on our own, and I quickly discovered that there were no more classes.
The information, training, accountability and coaching I needed to hone my skills and build my effectiveness as an agent was more available from outside organizations such as Brian Buffini or Tom Ferry, often at a hefty price tag.
6. You will not automatically get access to free leads
Larger, effective real estate teams typically have a serious investment in lead generation built into their organizations. Why? Because they know that their brokerages will not be providing the types of leads they need to grow their businesses.
The truth is, you may never get free leads. Most leads come in through Zillow or other lead gen sources and go directly to the agents paying the subscription fees. Unless your office has a dedicated lead generation team that hands out leads to agents, you will be on the hook for generating your own leads.
7. You will never see 100% of any commission check
Even if you work for one of those companies that insists they have 100-percent splits, you will end up paying for “transaction fees” or some other fee designed to generate income for the brokerage.
There is no free lunch. You might even be a broker working for yourself and banking your entire commission check — and then paying for marketing, lead generation, administrative support, and on and on. Real estate is a very expensive business to be in, and a significant chunk of every check goes toward keeping the machine going.
8. Not all Realtors make tons of money
Most barely make enough to earn a decent living. According to the National Association of Realtors, Realtors’ median gross income was $49,700 in 2019, an increase from $41,800 in 2018. In our region, approximately 86 percent of agents sell six or fewer homes a year (data from TrendGraphix.com).
Although many agents might look successful from the outside, many are mortgaged to the hilt, drive fancy leased cars and live paycheck to paycheck. Many agents rely on an additional source of income to stay afloat, such as a spouse or partner.
9. Job 1 is not what you think it is
Any business, whether a bakery selling bagels or a litigating attorney, is only as successful as their ability to produce a steady flow of “customers.” Long before you start mixing ingredients or standing before a judge, you must figure out how to attract clients. You could have the best pastries in town, but if no one knows you are there, it’s a moot point.
As is the case for any successful business, Job 1 is developing a flow of leads. Job 2 is learning to manage those leads and convert them into clients effectively. Job 3 is going out and getting more leads.
10. Real estate is a hyper-competitive arena
Translated, other agents will take your clients and think nothing of it. It’s a dog-eat-dog world, and just because you have a great set of ethics does not mean everyone else out there shares your values.
11. This is NOT an easy job
It will probably be the most challenging job you have every had. The emotional stress is very high because the stakes are so large. Whereas you might be able to punch a clock in some industries, as an agent, you are a self-employed person working for your clients. You will quickly discover there is no “off” button.
Agents who succeed in the long term spend a massive amount of time on the front end of their businesses, and there are no shortcuts. Even once a practice is up and running successfully, a serious amount of work goes into keeping it running smoothly.
Additionally, you will need to master a wide range of skills, including prospecting, managing clients’ expectations, and becoming a marketing expert, a crisis management counselor, housing expert, and so much more.
12. Successful agents master fundamentals
Successful agents rely on flawlessly executed scripts to succeed. This requires hours of practice and roleplay. It also requires hours and hours on the phone. Literally. It’s dull, laborious work punctuated by hang-ups, insults and the occasional friendly person on the other end of the line. Underscore “occasional.”
13. You will NOT be your own boss
Many choose to become Realtors because someone told them they would become their own boss. That is one of the cruelest cons on the planet. In a regular job, you typically have one boss or supervisor. As an agent, every client is your boss.
If you happen to be working with a large number of clients, you have an equally large number of bosses. In fact, if you think about it for a moment, a high percentage of homes you will sell will involve a couple, which means two bosses per transaction. Ironically, those two may have very different ideas of how they want you to perform. Remember, they are hiring you to perform a service for them, so they will have hopes, dreams and expectations.
14. Your schedule will not be as flexible as you think
Many get into real estate because they believe it gives them freedom and flexibility they never had in their 9-to-5 job. Yes, you might be able to attend preschool graduations and other things that happen in the middle of the day. And yes, you will be on call 24/7, work weekends, meet with clients in the evenings when they are off work, occasionally need to bolt from your home to deal with an emergency and other situations you haven’t even thought of yet.
15. Clients will not necessarily be enamored with your efforts
This business has morphed dramatically over the years. One of the most devastating changes has been the shift from a service-based industry to a commodity-based reality. Regardless of whether they like you as a person, today’s clients love themselves even more and will do what they can to get the best deal possible — even at your expense.
Real estate is also one of the few careers where your clients will frequently believe they know more about the process than you. You might develop a permanent red mark on your forehead from all the face-palming.
16. Get a box of Kleenex, and keep it handy
This business can be brutal, and it’s not for the timid or easily offended. Your best friend or family member might end up using another agent. You might spend hours and thousands of dollars trying to sell a home that ends up being withdrawn, effectively flushing your efforts down the proverbial loo.
You might spend countless hours showing homes to clients, only to have them sign a deal with someone holding an open house or a new home developer, effectively shutting you out of any compensation for your efforts.
We just had a long-term client, on a whim, sign a listing agreement for one of their properties with an agent they discovered had the same unusual last name — even though they already had a signed listing agreement with us. As you can imagine, it did not end well.
You might also discover that friendly people can get extremely unfriendly very quickly when large sums of money are involved.
17. Every real estate transaction comes with potential liability
Selling lumber at a big-box store? Low liability. Selling a home to a couple of first-time buyers? High liability. Think about it this way: There are thousands of attorneys out there who would like nothing more than to get a bit settlement from your E&O insurance company for any “mistake” you may have made during the transaction.
In case your recruiter forgot to mention it, the cost of the insurance is one more expense you will need to pay upfront — and the cost of insurance is going up.
18. There is a massive amount of details and paperwork
As litigation increases, the complexity of the documentation increases. When I sold my first home, the contract was one side of a legal-sized page.
Now, the purchase contract in many states is over 12 pages and, in states like California, the mandatory disclosures are over 80 pages in length.
As an agent, you need to be able to explain any clause on any page at any time. Factor in 40-plus page long Home Inspection Reports, Termite Reports, Roof Inspection Reports, Natural Hazard Disclosures, Preliminary Title Reports, and the paperwork can be overwhelming. Miss something or incorrectly explain a clause? Read No. 17 above.
19. The moment you get everything learned, the state or board will change the rules
Every time a real estate case is tried, local associations examine their contractual documents to ensure their forms cover any new regulations.
Factor in new forms for COVID-19, geological hazards, natural disasters — just when you get your knowledge of the documentation dialed in, you can guarantee it will change. Don’t have the time to familiarize yourself with the new documentation fully? Read No. 17 above again.
20. Recruiters are very seldom good agents
Let’s face it — if recruiters were actually great real estate agents, they would be out earning much more as a top-producing agent. The fact they are not, speaks for itself. Most recruiters are paid a base salary and a spiff for each new agent they sign. It is a highly competitive arena with recruiters trying to out-promise and out-produce each other.
21. You are a statistic
It takes countless calls to get someone to sign and find the diamond in the rough who will eventually turn into a top-producing agent. Most recruiters utilize the “spaghetti theory” — if you throw enough spaghetti at the wall, eventually, something will stick.
In other words, they know that the number of recruits that make it to top-producing agents is so low, they have to recruit constantly to keep the pipeline filled.
Additionally, the yearly turnover rates in real estate offices are very high, so recruiters have to hire many agents every year just to remain static. It is a numbers game, and top recruiters understand those numbers very well.
A recruiter does not really care if you succeed or not — they just know that if they hire a specific number of agents every month, a set percentage will wash out, a smaller percentage will actually stay for up to five years, and a minute percentage will turn out to be a mega agent in the rough.
22. Not every brokerage is a fit for a new agent
Some new agents would be best to start on a large real estate team instead of fending for themselves in the depths of the office agent pool. Those who want to be solo agents should look for offices that resonate with their values and ideal working methods.
Virtual brokerages may not be a good match for those who want to be in an active, collaborative environment, while those who want to work on their own may not need to pay for desk space and some of the perks found in larger brick-and-mortar offices.
Having been a Realtor for over 20 years, I have experienced many ups and downs, seen some unbelievable and even bizarre things, weathered through the foreclosure crisis, pandemic and, in spite of it all, beat the odds.
In retrospect, it’s probably a good thing my recruiter never explained the ups and downs of the business to me: I might never have become an agent and would never have experienced what has become a truly fantastic career and life opportunity.